Committee advances bill to allow vehicle value protection agreements with consumer safeguards

House Bill 504, which would create a regulatory framework for vehicle value protection agreements, drew extensive questions from committee members and earned a committee "do pass" recommendation after testimony from the bill’s presenter.

The bill, presented to the Regulated Industries Committee by Martin Monaghan, would authorize voluntary vehicle value protection agreements (VVPAs) for both financed and cash purchases. Monaghan told the committee that the measure “is a step towards ensuring consumer protection and market competitiveness in Georgia’s automotive industry.” He said the bill sets disclosure requirements, requires providers to maintain financial security, and grants consumers cancellation rights including a minimum 30-day free-look period.

The bill’s supporters said VVPAs differ from traditional gap insurance because they can benefit buyers who paid cash or made large down payments. Monaghan described a typical product offered in other states as a depreciation benefit — for example, a $10,000 benefit over 60 months — and said dealer cost for that product is often about $1,000. He also told the committee the attorney general would have enforcement authority for violations.

Committee members pressed presenters on several consumer-protection details. Representative Sarah Martin asked whether the statute’s definition of the free-look period explicitly required 30 days; Monaghan pointed to the provision that the free-look period must be "at least 30 days," and members suggested making the 30-day minimum clearer in the definition.

Concerns raised during the hearing included:

- Whether providers could cancel coverage after paying a large claim, leaving a consumer unprotected for future losses; a lawmaker recounted a personal claim experience with a company that canceled coverage after payment. - Whether VVPAs would be sold as loyalty products that pay benefits only toward a replacement at a dealer rather than as a cash payment to the consumer; witnesses confirmed many products apply the benefit toward replacement at a dealer and that providers typically require the purchaser to obtain the replacement vehicle within a set period (witnesses cited roughly 180 days). - The risk that dealers would mark up the product at point of sale and that the product might be co-marketed with dealers; witnesses acknowledged dealer distribution is common and said the bill prohibits tying the product to vehicle financing (i.e., financing cannot be contingent on purchasing a VVPA).

Monaghan summarized the measure to the committee: “House bill 504 is a pro consumer, pro business bill. By regulating these agreements, we can provide certainty and security to Georgia’s vehicle buyers.” He also emphasized the bill’s consumer protections, including disclosures, refund and cancellation rights, and the AG’s enforcement authority.

After questions and discussion, a committee member indicated a "do pass" motion (the record shows the motion was carried forward from Representative Washburn). The committee chair called the voice vote; members responded "Aye," and the chair ruled the bill to pass out of committee for further consideration. The committee did not record a roll-call tally in the transcript; the recorded record shows a voice vote and a chair ruling in favor of passage.

What the bill would do

- Define vehicle value protection agreements and require them to be voluntary and optional. - Require clear disclosures of terms, benefits, eligibility and refund policies and mandate providers maintain financial security to meet benefits. - Require a cancellation right with a minimum 30-day free-look period. - Prohibit conditioning financing on purchase of a VVPA. - Grant the attorney general authority to enforce the law.

Outstanding questions and next steps

Committee members requested clearer statutory language so the 30-day free-look minimum appears in the definition used across the bill. Members also sought clarification in subsequent drafting about whether benefits may be paid only to dealers, how long consumers have to obtain replacement vehicles to trigger a benefit, and how to prevent bad actors from canceling coverage after paying a first claim. The committee approved a recommendation to advance the bill; committee staff and the bill sponsor were asked to supply drafting clarifications before later stages.

Votes at a glance

- Action: Committee voice "do pass" recommendation on HB 504 (motion referenced as inherited from Representative Washburn; second not specified). Vote: voice vote; committee chair ruled the motion passed. Exact roll-call counts were not given in the transcript.